Managing a cannabis operation poses many challenges, but there are also some risks. Whether it is an indoor or an outdoor grow, the crop is exposed to many dangers. These might result in yield losses, which can potentially have a very negative impact on the finances of the grower. In agriculture, there are insurances that protect the crop in order to allow growers to have a backup plan in case something goes wrong. However, when it comes to the cannabis industry, the situation is a bit trickier.
“Most of it is because of the illegal status that cannabis used to have,” says Greg Baldwin, president of Matrix Insurance & Benefit Solutions. “Not many banks have been funding cannabis businesses, and conversely even insurance companies have been reluctant to jump into this new sector.”
The importance of protecting one's work
According to Greg, one of the most important things is to educate growers on the importance of insurance for their crop. “For instance, hemp is mostly grown outdoors. Thus, this is greatly exposed to many risks, pathogens above all. A crop coverage would be kind of necessary, as it would prevent growers facing issues from which it can be quite hard to recover. Wildfire, hails – those are only two of the many dangers that can affect an outdoor cultivation. Insurance agencies like us have to advise growers to protect their crop, even and especially in the worst-case scenario.”
Dangers also indoor
However, problems might occur also in indoor cultivations, and a recent example has shown that. “Just a few weeks ago, there was a massive power outage in North California,” Greg points out. “In that particular situation, many growers have lost their refrigerated crop.” Aside from this, the greatest dangers for indoor facilities is represented by equipment that might get damaged. “That is, the general liability of a building,” Greg explains.
A bright future
According to Greg, as soon as cannabis becomes federally legal in the US, more insurance companies will start serving the cannabis industry as well. “In this way, insurance prices should decrease, and growers will have more possibilities to choose from when it comes to protecting their operation.”
“This industry is very cash intensive; large investments are necessary to start new cannabis operations; the last thing one wants to see is these investments jeopardized because the crop has been damaged or lost. Speaking of this, I think that as soon as banks will finally be allowed to support cannabis businesses, there will be more small-medium sized operations, and together with an increasing number of insurance companies jumping into this, we will see a more diversified sector where also smaller cannabis operations can thrive without the fear of losing their crop because of an unexpected accident.”
For more information:
Matrix Insurance & Benefit Solutions
1091 N Palm Canyon Dr., Ste 4
Palm Springs, California 92262